South Korea Toughens Regulations for Local Crypto Exchanges

June 29, 2018

South Korea’s Financial Services Commission (FSC) has made amendments to the regulations against money laundering applied for local crypto exchanges. From now on all local banks will have to apply more sophisticated monitoring over accounts of companies that own crypto platforms.

As a rule, every exchange has two bank accounts, a depositing account to store all funds of the platform users and operational one for the company’s own funds. But as recent FSC inspections of Nonghyup Bank, KB Kookmin Bank and KEB Hana Bank have shown, some exchanges have transferred some share of their customers' funds to own accounts thus having violated the FSC's rules on separate storing of these assets.

Currently South Korean banks may execute control over user asset flows. So FSC expressed concern that lack of more detailed monitoring over bank accounts may result in money laundering or tax evasion via operational accounts used for crypto trade with foreign platforms. The purpose of the amendments made was to handle this situation.

As the statement published on the agency’s website says, now information on such actions if any will be passed to the regulator immediately.

Remember that in January this year FSC banned anonymous trade at local crypto exchanges and imposed regulations on mandatory user identification.